Medicare Supplement Premium Increases: Uh, Ohby Denise Early on Oct. 08, 2010, under Health
Someone seems to have gotten wind of big rate hikes coming for Medicare Supplement premiums. Nevada Senator Harry Reid announced, “We are hearing disturbing stories from beneficiaries across the country about excessive premium increases for Medigap supplemental insurance policies”. Reid and other top Democrats have asked Health and Human Services Secretary Kathleen Sebelius to stop the increases or find a way to keep them under control.
According to The Hill:
The lawmakers cited some Medigap plans offered by United of Omaha, which will see premiums increases around 40 percent next year.
“An increase of this magnitude raises serious concerns about premium-setting practices and rate review procedures in place for Medigap policies,” the Democrats wrote.
Although the new health reform law includes $250 million for states to monitor rate changes, the reviews don’t explicitly cover Medigap plans, the lawmakers note.
They’re calling on HHS to “work with Governors and State Insurance Commissioners to help them gain this authority where it does not exist today.”
The lawmakers are also requesting “a study of Medigap trends and costs to provide a benchmark against which proposed rates can be measured.”
Possible reasons for large premium increases could be:
1) Medicare Supplement companies entering a market purposely offered low premiums to attract cost-conscious seniors. The rates were not realistic and so must be raised in a year or two in order for the plan to be profitable.
2) In June of this year, “modernized” Medicare Supplement plans began. With changes required for new “modernized ” plans, each Medicare Supplement company was starting over with a “new book of business” as of June 1. This meant that premiums for plans starting in June 2010 could be lower because they had no claims history. But the older plans – sold before June 2010 – now have no new, younger, healthier members paying premiums. Plans with older, sicker people will likely have higher expenses and lower profits, requiring higher premiums next year.
Each state is responsible for regulating their insurance market and some states are more active in overseeing insurance companies and their rate increases. Whatever the reason for the rate increases, seniors may get sticker shock when they see their premiums for 2011.
FOR MORE INFORMATION, SEE MEDICARE CHOICES OF ARIZONA.